"The Joys of Home Ownership"

Fans of Westside Shadow Buyer, and they are legion, have followed the saga of the Shadowbuyer family since 2009.  As I wrote from the get-go, I am real, but I’m not a realtor.  And, real people have to deal with the realities of life.  Fortunately, my reality is pretty great.

After exhibiting extreme patience (and comparative, but not extreme frugality) for nearly 10 years, my reality in the last couple of years has pointed to, “it’s time to buy a home in Los Angeles.”   I managed to miss the last couple of  years of economic badness that has hurt so many recent home buyers, and to keep dry and ready a nice chunk of money.

So, when it came time to buy  something, I figured I’d be good to go.

Ah, so naive.

When the front page blares that credit is flowing again, and that Wells Fargo is actively lending to any home buyer with excellent credit and 25% equity, you’d think you could get a deal done pretty readily.

In fact, the banks tortured me to no end, but eventually I prevailed.  After coming up with 40% in cash, a national lender consented to float me the other 60%, and we closed on a home in Cheviot Hills.

But this wasn’t just any old house.  If you look back to my initial post on Shadowbuyer, you’ll see that my requirements were reasonable – 2.5 bathrooms, none of them of the laundry room or broom closet variety.  Off-street parking for 2 vehicles with direct or at least secure access to the house.  A reasonably small number of steps up to the house, and inside the house.  Some usable backyard space for my kids.  No cliffs or ledges to fall off of.  Some nice walkability to the neighborhood.

But what we found, at the last possible moment that we could buy a house before it was too late and our new baby arrived, was totally unexpected.  It was a 100% unspoiled, single-owner, mid-century modern time capsule.  The builder and his architect brother built it in the early ’60s with every custom flourish you could imagine, and these guys were absolute architectural and engineering geniuses, with timeless taste in surface, materials, and fixtures.

As mid-century homes go, and I’m not just saying this, the only example I’ve seen that’s better than ours was a $19 million (asking price) house on Baroda in Bel Air/Holmby Hills that eventually sold for $15.5 million).

It’s six months later, we are in, and we are LOVING our house.  Thanks for your comments and support along the way.  Now that I’ve got my house, if anyone out there  would like for me to post their wants/needs, with hopes that some ready seller will see it and get in touch, please send me the details and I’ll be happy to help out if I am able.

You miss 100% of the shots you don't take.

The Shadowbuyer family considered its rental home possibilities one evening a couple of weeks back, with the help of Westside Rentals.  It was truly depressing to see the available options in the single-family residence section in our price range.  Then, as determined as ever to get out of our current rental before Shadowbaby #2 makes his debut this summer, and accepting that a new rental was off the table, we broadened the list of neighborhoods in which we might buy.

That’s when it happened.  On a Redfin.com-powered virtual flyover of the westside, from La Cienega to the sea, and from Mulholland to LAX, we spotted something interesting.  It was in a neighborhood that we both knew and liked, but hadn’t really considered previously.  It was an unspoiled example of an architectural style that at least one of us loves.  It checked almost all the boxes on our must list – bedrooms, bathrooms, parking, non-disgusting condition, sidewalks, largely single-level, kid-safe yard, caffeine proximity, and so on.

The following day, I gave it a drive by, fully expecting it NOT to live up to the online photos.  The door happened to be open, and a realtor waited inside.  I popped in for an unscheduled visit and was blown away.  In fact, I was almost sure that this was the kind of home that Dwell-subscribing, aspiring denizens of UnhappyHipsters.com would tie up in a banker-bonus fueled bidding frenzy that would carry it well out of striking distance for the Shadowbuyer family.

Channeling the Gretzkyism that one misses 100% of the shots one doesn’t take, we instructed Shadowbroker to prepare an offer at a smidgen over asking price.  We figured that by being enthusiastic and quick, we might pull out to an early lead in the race to buy this home.

We were right in assuming that there would be a bidding war.  Before the first scheduled open house, there were four enthusiastic offers in place.  By the Tuesday caravan, we were already in a multiple counter situation.  After three rounds of overbidding, accompanied by a fair measure of “Dear Seller” letters (what is this, 2005?), we settled in to wait for a response from the sellers.  We fully expected to be outbid by yet another Angeleno with family money and an architectural hankering.

But then, late one evening, we got the call from Shadowbroker.  Congratulations – they’ve accepted your most recent offer.

Today, the Shadowbuyers are gnashing our way through a tough escrow.  It is unbelievably stressful and awful, but at no point have I thought, “forget it, this isn’t worth it.”  So, that makes me feel like we have actually found THE home for us.  By my next update we should know more about the deal status.  I’d hate to blog anything that screws it up.  One thing I know for sure – once we are done with this process, we will NOT be spending an hour each day scouring the web for houses to buy.

Need a short link for this post?  It’s http://wp.me/pFbaA-1M

My residential clock is ticking.

As you may have read in the comments to my prior post, after the holidays we launched a 5-point attack on some long-listed homes in our target areas.  Some of those offers yielded no response, others earned us counters.  We countered on some of them, but didn’t hit the bid or close the deal in any of the situations.

So, it was back to the drawing board.

Now, I may not have mentioned this to the group, but if you saw her in person, there would be no question in your mind, so I’ll tell you – Mrs. Shadowbuyer is pregnant.  Like, very pregnant.  That means that we have a special kind of time pressure at hand.

Let’s call it the “residential clock,” a play on the biological clock.  The logic on the biological clock goes like this (single ladies out there, am I right?):  if I don’t meet THE guy by age 36, date him for a year, get engaged, then plan and have a wedding within a year of getting engaged, and get pregnant ON THE HONEYMOON, then I’m at risk of being 40 and childless, so I have to make this happen RIGHT NOW!

The residential clock works like this:  our baby is due on June 1 (he’s not, but let’s say he was, for illustrative purposes; oh, by the way, we’re having a boy!).  If you assume that we’ll need about a month (30 days) to scrape, paint, repair, curtain, carpet, basically furnish, and organize a new house, and escrow is typically 30 days, and the offer/counter/counter/accept cycle is typically 5 days, and we would like to live in our new home for, say, 30 days before the baby comes (assuming he doesn’t come early!!)…then, counting back from June 1st, we need 95 days from the moment we submit an offer in order to beat the residential clock.  For those of you keeping score at home, 95 days before June 1st is February 26th.

That means that if the Shadowbuyer family is to buy and occupy its new home without running out the residential clock, then we have just 16 days to identify the property and get to work.

That makes me what they call a motivated buyer, and, that’s why the capitulation is upon us.  My friends, after losing out on the 5-point plan, as well as an ensuing bidding war involving multiple counter-offers and mind games in pursuit of a $2 million+ fixer in a great location that we would have been quite happy to call home (in fact, the street was even listed in THIS POST introducing Mrs. Shadowbuyer some months back as a street of great interest to us), the Shadowfamily is down to a couple of options.

First, we are currently in pursuit of a really cool house that’s well outside of our originally stated target areas. Second, we are considering the possibility that we need to get out of our current rental and keep waiting, probably via a one year lease on a little house with a yard, in a good location.  Though we expect further price declines, we don’t relish the prospect of moving twice, we’re ready to put down some roots, and we hope to stay in whatever we might buy for 10 years or more, so, hopefully, it won’t come down to the rental option.

Do me a favor and root for us to get the house we’re currently chasing.  If we do, I’ll give you a full report on it after escrow closes, and even publish photos of the housewarming as previously promised.

Thanks, Mr. Shadowbuyer

Under water, and feeling scared.

This whole home search has become bogged down.  I’ve got a life-savings-sized pile of loot ready to go, a wife and daughter who have taken to declaring that they’ll do this or that, “once we get into our new house,” and even I have just about had it with the indignities of our current rental situation, lovely, and even enviable, as it may be.

Why the bogginess, you ask?  It’s the sellers.  The over-leveraged, overambitious (circa 2006) home “owners” who went for the brass ring, and realize now that the free ride they were looking for was merely a mirage.

As an example, let me tell you about the perfect house we found.  It’s really nearly perfect for us.  It’s in Brentwood.  It has 5 bedrooms.  It is traditional, but beautifully remodeled.  The surfaces are great.  The kitchen is great.  The layout is great.  The backyard is a fair size, with some grass to play on, and a patio to relax on.  There is no overwhelming pool.  It is a 7 minute walk from the intersection of Sunset and Barrington, which ticks off my “caffeine adjacency” requirement.  The front yard is gated.  The driveway is circular and pretty gently sloped.  I would probably be happy to live there more or less forever.

It is for sale.  “So, why don’t you just buy it,” you ask?  Well, they are asking $3 million.  I’m not afraid of an out-of-reach asking price.  I take Santa Monica Distress Monitor’s mantra to heart – “if you’re not embarrassed by your offer, it’s not low enough.”  But here’s the problem.  My $2.5 will NEVER buy this house.  Why not?  Because it has a troubled history, and the current owners are so far under water that even the adults are wearing Finding Nemo underwear.  They listed it earlier this year for $3.6 million.  In 2006, before the badness, that is about what it was worth.  Unfortunately for them, time flies when you’re overextended.

You see, they bought this perfect home in 2006.  For $3.6 million.  They have cut,  and cut and cut their asking price as time has marched on.  Now, it’s the end of the year – the winter doldrums of home buying.  They  were probably looking to spend one last Thanksgiving in their home, after which they slashed their price to $3 million, figuring they’d get the house sold.  I  would be 1000% happy to call their home my home.  But I don’t have the full $3 million to pay for it.  I can probably come up with about 20% shy of that number – $2.4.  A lot of money, to be sure.  But if you bought something for $3.6 two years ago, could you stomach showing up to the close with a check for $1.2 million?  That means that not only did you pay your mortgage for two years,  but you are shelling out an extra $50K/month for the privilege of having lived there.

Remember,  $50k/month will rent you one of the 50 nicest homes in Los Angeles, whether it’s  Malibu Colony beachfront manse, a compound in the hills of Bel Air, or something stately in the flats of Beverly Hills or Brentwood Park.

So, all that aside.  If you are the owner or broker on 201 N. Saltair, the Shadowbuyer family would like to make a deal.  If you can afford to take  $2.4, drop me an email.  We’ll close in 30 days.

"It took Diff'rent strokes to buy this house, yes it did."

Regular readers will note that I’d prefer to live walking distance to stuff, in a kid-friendly area with sidewalks.  But all that might  be out the window, if Mr. Drummond‘s house falls into the mid $2s.

This is one A. Quincy Jones one-story sprawler that looks well worth the drive into the clouds (with oxygen tanks) that it might require of its inhabitants.

Curbed has the whole story, and Redfin has all the details.

This is Shangri-La, oh, oh!

Jumbo mortgage rates are down.  Lenders are opening up their vaults.  Loan to value requirements are loosening.  ShadowBuyer has liquidated all of his equity positions, and is ready to pull the trigger on a home purchase.  Whether you think prices in Santa Monica still have further to fall or not, you can’t disagree that now seems like a better time to buy than 1 or 2 years ago.  There’s no telling what the winter and first half of 2010 hold, but if we can find a place that we like, and that’s big enough for the next 5-7 years or more, then we would feel  good about getting a deal done.

So, what’s the problem?  My problem today is inventory.  5% of homes turn over each year.  We are halfway through the 1-year window in which we are really ready to buy.  That means that every 40th house, give or take, has come up over the last six months, and that another 1/40th of the inventory will come up for sale in the next six months.  Unless you want to live in a planned community where all of the homes are more or less identical, that scarcity of turnover can feel severely limiting.  For example, until this week, we had seen exactly 0 homes within our price range that included enough bedrooms and bathrooms, any kind of move-in-ability, and the look and feel of something that is actually worth more than the $2 million we are going to pay for it.  Today, I toured the first home to meet that rather broad set of specifications.  It still needs about $200K worth of upgrades, but they could be deferred for a couple of years with no problem.  Oh wait, one problem.  This home sits frustratingly out of reach, priced (and with a pending offer very near its asking price) about $200K north of where I  can get to it.

So, what’s a guy to do.  Sit tight?  Keep renting?  Find some more money?  Be patient?  Wait until the next wave of loans go bad?  Wait until California unemployment spikes further (currently 12.2%, and headed higher, they say)? Broaden my horizons and consider living somewhere outside my primary area of focus?  I’m going to do (or try to do) all of the above, but, as frequent readers of this blog know, I’m on a schedule here.

Or, maybe you can help me out.  If you or a friend own a home that meets my specs, drop me an e-mail, and let me know.  If it’s your home, I’ll give you a giant pile of money for it.  If you provide a referral that leads to a deal, I’ll let you write your name in any cement we pour in the first few years we live there, and I’ll buy you the newest iPod, a Wii, or a two-night stay at the newly remodeled Shangri-La Hotel in Santa Monica.

A bubble. Frozen. For now.

There is a guy blogging under the handle Dr. Housing Bubble, over at the Dr. Housing Bubble Blog.

Dr. Housing Bubble is prolific, and does an extremely thorough job of researching and considering mortgage, banking, employment, and other industry stats, figures, and mechanics.  His most recent post highlights why we are in the eye of the mortgage default and foreclosure hurricane, and how 2010 and 2011 are shaping up to be absolute bloodbaths for banks and over-extended home “owners.”

Even so, a guy’s gotta live somewhere.  When I find the right place, at the right price, I’m still going to buy it.  If it happens that you have a home you’re considering selling that matches the parameters set out in my initial post, please drop me a line.

Not so, up in them thar hills.  Westridge.  Bayliss.  Queensferry.  Mandeville.  Kenter.  Tigertail.  Bonhill.  Norman.  Robinwood.  Bundy.  Lindenwood.  If you are trying to sell a home in Brentwood’s northern reaches, more than a 1 minute drive north of Sunset Blvd., be prepared to keep coming down the price mountain for the next several months.

For every 10 people who want to buy a home on Gretna Green or Carmelina (are there even 10 buyers out there at the moment?), there are only 1 or 2 who are into the canyon lifestyle (long twisty road to home, nice views, no sidewalks, nothing much in walking distance but wilderness, precarious hillside settings, etc.).

For me, The ShadowBuyer, this presents a bit of an opportunity.  Though I’ve stipulated coffee adjacency as a “must” in my wishlist of home attributes, I’ve spent a good portion of my life up Bundy and Kenter Canyons, and I can appreciate what they each have to offer.  If the right home comes along, with enough of a yard for ShadowBaby to play in, and a “wow-inducing” view that counterbalances the lack of walkability, I could become a canyon dweller once again.

So, if you have a home that meets the parameters laid out in my initial post, other than coffee adjacency, please drop me an e-mail at shadowbuyer (at) gmail (dot) com, and we can talk.

Most metropolitan area median home prices, impacted by distressed sales, trended down in the fourth quarter from a year earlier.  At the same time, existing-home sales rose in only six states from the fourth quarter of 2007, according to the latest survey by the National Association of Realtors.

That median home price stat is somewhat irrelevant to the Shadow Buyer family.  If there existed such a thing as a median priced home in Brenwtood or Santa Monica, believe me, I would never have been inspired to create this blog.  I would be playing in my median backyard with my far above median kid.

For Q4 2009,  in the micromarket that I hope to call home, based on my reading of the market, I predict that asking prices will stay flat with Q3 as sellers remain optimistic.  Meanwhile, selling prices will be down about 15% from last year, and 5% from Q3 as motivated sellers trade their optimism for pragmatism.

And the Shadow Buyer family?  I give us a 75% shot at having an accepted offer and a deal in progress by New Year’s Eve, probably as a result of counter-offering 5% more than we wanted to, and 10% less than the person selling us our new home would have liked.  Moreover, I give us a 50% chance of landing in our “North of Montana and parts of the 90049″ target area, with the other 50% being scattered through the rest of the 90049, and into the lower, closer-in areas of the Pacific Palisades.

Remember, if you have a home you’d be willing to sell from out of the shadows, or if you have a friend or relative you think might be a ready shadow seller, please read the initial post on this blog, and then shoot me an email at shadowbuyer [at] gmail [dot] com.